Walmart Inc. acquires Tiger Global Management's remaining Flipkart stake for $1.4 billion, reinforcing its position in the Indian retailer, and aiding Tiger Global in providing investor distributions amidst challenging liquidity conditions.
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Shopping carts with the Walmart logo are seen outside a Walmart store in Burbank, California on August 15, 2022. - Walmart, the largest retailer the United States, will report second quarter earnings on August 16, 2022.
Acquiring Flipkart
Walmart Inc. has acquired Tiger Global Management's remaining stake in Flipkart for $1.4 billion, signaling a bolstering of its position in the Indian retailer. According to a report from Reuters, this move also aids the money manager in providing distributions to investors during a challenging liquidity climate.
The transaction, recently completed, led to the valuation of the Indian e-commerce giant at $35 billion, as stated in a letter to investors from Tiger Global. This valuation represents a slight decrease from Flipkart's previous valuation of nearly $38 billion in its 2021 funding round. The investment firm declined to comment on the deal.
Successfully Exiting from Investment
The firm had initially invested $8.6 million in Flipkart's Series B round back in 2009 when the valuation was $42 million. Subsequently, between 2010 and 2015, they further invested $1.2 billion through their Private Investment Partners' funds five through nine, hedge fund, and long-only vehicle. The recent sale marks a significant step in Tiger Global's investment journey with Flipkart.
Over the years, Bloomberg reported that Tiger Global strategically divested parts of its Flipkart stake, selling some to SoftBank Group Corp in 2017 and later to Walmart in 2018. Cumulatively, their investment in Flipkart has yielded impressive gains, amounting to $3.5 billion. The money manager plans to share distribution details with investors in the forthcoming weeks.
Having initially acquired a 77% stake in Flipkart for $16 billion in 2018, Walmart has been intensifying its expansion into India's burgeoning consumer market. In a recent move, its local payments business introduced an online retailing app that aims to host local stores and smaller merchants, further solidifying its presence in the Indian e-commerce landscape.
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This can be seen from another angle - as a move to acquire shares in a company that directly competes with Amazon's local division. Interestingly, Amazon managed to establish a similar business internally, investing less than $7 billion. This alternative perspective highlights the strategic rivalry between these retail giants as they vie for dominance in India.
Accepting the Acquisition
After significantly utilizing the capital raised in 2021, TechCrunch reported that Flipkart is now on the lookout for additional funding. In recent months, the company has assessed market interest, but a deal has not materialized due to a lower valuation. As a result, it is highly probable that Flipkart will seek a substantial portion of the required financing from Walmart for its upcoming funding round.
Tiger Global conveyed a deep sense of appreciation for their longstanding partnership with the Flipkart team. They expressed gratitude for the opportunity to be part of the company's journey from its early stages of growth. Their investment in Flipkart allowed them to witness and contribute to the company's evolution and success over the years.
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